Cloudflare Just Struck a Deal with OpenAI. What That Means for NET Stock Here.

Cloudflare (NET) has emerged as one of the biggest beneficiaries of the artificial intelligence (AI) boom, with investors increasingly viewing the company as a critical player in the internet infrastructure that powers next-generation applications. As AI adoption accelerates across industries, every strategic partnership carries added weight, making Cloudflare's latest announcement particularly noteworthy.

The enthusiasm showed up on Wednesday, July 8, when NET stock rose 1.7% after Cloudflare unveiled a first-of-its-kind research pilot with OpenAI. The partnership will explore how insights from participating websites across Cloudflare's global network can help AI search engines discover and index relevant content across the open web more effectively.

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Since more than 20% of the web sits behind Cloudflare's global network, the company has an exceptional view of the ways in which content changes and internet traffic behaves in real time. That level of visibility could become a valuable competitive advantage as AI models demand fresher information.

If the research delivers encouraging results, Cloudflare could deepen its role in the AI ecosystem by becoming a trusted infrastructure partner for companies building AI search tools. That would not only highlight the value of its network but also create another long-term growth opportunity for the company as demand for smarter AI infrastructure continues to climb.

Headquartered in San Francisco, California, Cloudflare is a cloud services provider that helps businesses improve security, network performance, and application reliability. With a market cap of approximately $96.6 billion, its platform offers cybersecurity, content delivery, networking, Zero Trust access, developer tools, AI services, cloud storage, and domain management solutions.

The confidence has shown up loud and clear in the share price. Over the past 52 weeks, NET stock has rallied 41%, while year-to-date (YTD) gains stand at an equally impressive 38.5%. The momentum has only picked up speed in recent months, with shares soaring 41.4% over the last three months and then piling on another 10.9% over the past five trading sessions.

The momentum has not come out of thin air. On Thursday, June 4, the stock had touched a fresh 52-week high of 276.82 after the leading connectivity cloud company announced its acquisition of VoidZero, the open-source-first company behind the next-generation JavaScript tooling ecosystem Vite. But even today, July 9, the stock has reached another 52-week high of $278.88.

The deal strengthens Cloudflare's position in the fast-growing developer ecosystem, adding another feather to its cap as it continues expanding its AI-focused platform.

The growing optimism has also pushed Cloudflare into premium territory. NET stock is currently trading at 227.84 times forward adjusted price-to-earnings and 34.36 times sales. Both valuation multiples sit significantly above broader industry averages.

On May 7, Cloudflare delivered a strong first quarter for FY2026, beating Wall Street on both revenue and earnings as demand for its platform continued to accelerate. Revenue climbed 33.5% year-over-year (YOY) to $639.8 million, ahead of analysts' estimate of $620.9 million. Adjusted EPS rose 56.3% from the year-ago value to $0.25, beating the Street's expectation of $0.23.

Delving deeper, non-GAAP gross profit increased 26.1% YOY to $465.7 million. Non-GAAP income from operations rose 30.5% to $73.1 million, while non-GAAP net income grew 60.9% from the prior year to $94.1 million. Additionally, free cash flow increased 59% YOY to $84.1 million, underscoring the company's solid execution.

Management called AI the biggest growth driver in Cloudflare's history, citing strong demand for AI and agentic workloads, continued momentum among its largest customers, improving returns from its go-to-market strategy, and accelerating adoption of its Workers developer platform across the business.

Cloudflare continued to deepen relationships with its biggest customers as well. The company ended the quarter with 4,416 customers generating more than $100,000 in annual revenue, marking a 25% increase from a year earlier. Revenue from these large customers climbed 38% YOY and contributed 72% of total revenue during the quarter, up from 69% in the first quarter of last year.

Looking ahead, management expects second-quarter FY2026 revenue to be between $664 million and $665 million. It also projects non-GAAP income from operations of $90 million to $91 million and non-GAAP net income per share of $0.27.